Public Safety Officer

[Snaggletooth]

One of my customers keeps telling me there was a special $3000 deduction for medical payments from a pension plan for ex-cops. That it was passed in 2007 on a Revenue Ruling.

I was embarassed not to know anything about it. Anyone know what this is about?

[WhiteOleander]

Yes, it's posted in the TTB updates.

This is posted in the WORKER RETIREE EMPLOYER RECOERY ACT FOR 2008 in the updates posted here at TTB.

Insurance Premiums for Retired Public Safety Officers
Page 3-3 and 13-26, TheTaxBook™ 1040 edition. Retired law enforcement officers, firefighters, ambulance crews, and other public safety officers can elect to exclude from income distributions made from eligible retirement plans that are used to pay the premiums for accident, health insurance, or long-term care insurance. The distribution must be made directly from the former employer’s plan to the insurance provider. The amount that can be excluded is the lesser of the insurance premium or $3,000.
IRS Notice 2007-7, Q&A #23, indicates that the exclusion only applies to insurance issued by an insurance company regulated by a State, and thus does not apply to self-insured plans.
New law. The new law clarifies that the exclusion also applies to self-insured plans as well as insurance issued by an insurance company

[Burke]

The thing that eliminates it for most of these people is the requirement that the employer's plan must pay it directly to the insurance company. Maybe they are catching on, but I haven't found one yet that does this.